Excellent Book: Charlie Munger For All Seasons
Charlie Munger has written and said volumes about investments that would take tomes to truly elaborate.
However, in summary, one would be wise to use Charlie Munger’s four filters in investments:
1. Deal in things you are capable of understanding.
2. Look for intrinsic durable advantage (viz., moat).
3. Look for talent and integrity in the management
4. Buy at a price that makes sense with a margin of safety.
Also, Warren Buffett has this to say:
Charlie and I avoid businesses whose futures we can’t evaluate, no matter how exciting their products may be. In the past, it required no brilliance for people to foresee the fabulous growth that awaited such industries as autos (in 1910), aircraft (in 1930) and television sets (in 1950). But the future then also included competitive dynamics that would decimate almost all of the companies entering those industries. Even the survivors tended to come away bleeding. Just because Charlie and I can clearly see dramatic growth ahead for an industry does not mean we can judge what its profit margins and returns on capital will be as a host of competitors battle for supremacy. At Berkshire we will stick with businesses whose profit picture for decades to come seems reasonably predictable. Even then, we will make plenty of mistakes.
To be a successful investor the Charlie Munger Way, you have to do two things:
1. Apply the four filters above.
2. Just sit on your butt!